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Swiggy is serving the IPO at a lower valuation of $11.3 billion as against its earlier target of around $15 billion; Should you invest?
Swiggy IPO Opens On Wednesday
Swiggy IPO: The much-awaited Swiggy IPO opens for bidding on November 06. The company aims to raise Rs 11,327.43 crore via a combination of the sale of fresh shares and an offer for sale. The IPO closes on November 08.
Swiggy IPO: Opening Date, Allotment, Listing
The Swiggy IPO will be available for public subscription between November 6 and November 8. The allotment will be finalised on November 11 and shares listing will take place on both BSE and NSE on November 13.
Swiggy IPO: Price Band and Lot Size
The price band of the IPO has been fixed in the range of Rs 371 to Rs 390 apiece.
A lot size has been fixed as 38 shares. Retail investors need to apply for a minimum of one lot comprising 38 shares, or in multiple of 38 shares thereof.
The minimum lot size investment for small NII is 14 lots (532 shares), amounting to Rs 2,07,480, and for big NII, it is 68 lots (2,584 shares), amounting to Rs 10,07,760.
Swiggy IPO GMP Today
The grey market premium (GMP) of Swiggy stands at 5 per cent or Rs 20 in the unlisted market, a day ahead of its initial public offering (IPO), which opens tomorrow, i.e., on November 6.
However, it is important to note that grey market premiums are just an indicator as to how the company’s shares are stacked up in the unlisted market and are subject to change rapidly.
About a month ago, Swiggy shares were trading at Rs 515 in the unlisted market.
Swiggy IPO: What Analysts Say
Brokerages have so far given mixed reactions to Swiggy IPO. While some analysts have raised concerns over the company’s sustained losses, others are optimistic about Swiggy’s future given the strengths and the projected growth of the online food delivery and quick commerce markets.
“Swiggy, at the upper price band of ₹390, is valued at Price/Sales, EV/Sales and P/BV multiple of 7.8x/7.3x/7.1x respectively of its FY24 financials on post-issue capital. While comparing with Zomato, the issue appears to be fairly priced on all these parameters. We recommend investors to subscribe to the issue with a long-term investment perspective,” said SBI Securities.
Aditya Birla Money recommended avoiding the Swiggy IPO due to the “reported negative” cash flows and ongoing losses, alongside a slightly high valuation of 7.7x FY24 price-to-sales.
Analysts at brokerage firm Bajaj Broking in their IPO note recommended a ‘Subscribe for Long Term’ rating.
“Over the past three fiscal years, the company has consistently reported losses on a consolidated basis. In FY22, the total income was Rs 6,119.78 crore, with a net loss of Rs 3,628.90 crore. The following year, FY23, saw an increase in total income to Rs 8,714.45 crore, but the net loss also increased to Rs 4,179.31 crore. In FY24, the total income rose further to Rs 11,634.35 crore, while the net loss reduced to Rs 2,350.24 crore. In the first quarter of FY25, ending on June 30, 2024, the company recorded a total income of Rs 3,310.11 crore and a net loss of Rs 611.01 crore. These figures indicate that the company has been experiencing continuous financial losses over the reported periods,” Bajaj Broking said in the note.
For the last three fiscals, the company has reported an average EPS of minus Rs 14.90, and an average RoNW of minus 35.39 per cent. The issue is priced at a P/BV (price-to-book-value) of 11.60 based on its NAV of Rs 33.61 as of June 30, 2024, and is at a P/BV of 7.31 based on its post-IPO NAV of Rs. 53.36 per share (At upper cap).
“If we attribute annualized FY25 earnings to post-IPO fully diluted equity base, then the asking price is at a negative P/E, and based on FY24 earnings also it is at a negative P/E, as the company has posted losses for the reported periods. On other parameters the issue appears aggressively priced,” Bajaj Broking added.
Swiggy is an online food and grocery delivery company and among the first hyperlocal commerce platforms. On the financial front, the company has reported losses for the last three fiscals on a consolidated basis.
Kotak Mahindra Capital Company, Citigroup Global Markets India, Jefferies India, Avendus Capital, JP Morgan India, BofA Securities and ICICI Securities are the book-running lead managers of the Swiggy IPO, while Link Intime India Private Ltd is the IPO registrar.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.